Select the Correct Statement from the Following

question 153

Multiple Choice

Select the correct statement from the following:

• A) Profit margin reflects a company's ability to produce net sales from total assets.
• B) Total asset turnover reflects the percent of net income in each dollar of net sales.
• C) Return on total assets can be separated into gross margin ratio and price-earnings ratio.
• D) High returns on total assets are desirable.
• E) Return on total assets analysis is beneficial in evaluating a company but is not useful for competitor analysis.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, typically from profits or retained earnings, and often in the form of cash or stock.

Income

The financial gain earned or received by an entity within a specified timeframe, typically a result of employment, investments, or business operations.

Intra-entity Gross Profit

The profit made from transactions between divisions or units within the same company before external sales.

Inventory Costing

The method used to assign costs to inventory, including approaches such as FIFO, LIFO, and weighted average cost.